Consumer Reports ® recently put out a special report on “The Truth About Car Insurance,” in which it did an data analysis of over 2 billion car insurance price quotes throughout the U.S. The main finding of the Report: “That how well you drive may have little to do with how much you pay.” Consumer Reports analysts compared quotes from five national insurers: Allstate, Progressive, Geico, State Farm, and USAA.
The Report found that rate quotes are less about driving habits and increasingly based upon socioeconomic factors. These factors can include your credit history, whether you use credit cards, and surprisingly even your TV provider. According to the Report, “the [car insurance] business thrives on withholding critical information from customers.” This lack of transparency in the market is really troubling.
Who Charges the Most and the Least?
According to Consumer Reports, this is how the big five insurers rate, on average, for insurance prices from highest to lowest:
- Allstate: $1,570
- Progressive: $1,414
- Geico: $1,177
- State Farm: $1,147
- USAA: $817
Auto insurance is regulated at the state level, meaning that rates are understandably going to differ state by state. That also means that the state has to regulate pricing and keep the marketplace fair. According to the Report, over the past 15 years, “insurers have made pricing considerably more complicated and confusing,” and thus, causing transparency issues.
Consumer Report goes on to cite some of the worst practices by insurance companies in another report, How your credit score raises your premium. This report found that single drivers who only had “good” scores on average paid $68 to $526 more per year than similar drivers with the “best” scores. To see how Colorado rates click here. Interestingly, a customer with excellent credit but with a previous DWI pays on average $1,141 less than someone with just bad credit! That’s kind of scary to think about. The report also provides 7 Ways to Fight Unfair Pricing, which are:
- Request an “extraordinary like circumstances exception” if you receive an adverse action.
- Shop at the companies that charged Consumer Reports’s model drivers with good and/or poor credit scores the lowest premiums.
- Monitor your credit reports to make sure they’re accurate.
- Use credit that insurer models favor, such as national bank-issued credit cards.
- Keep credit-card balances in check.
- Avoid certain types of credit that insurance company credit-scoring models penalize you for (i.e. department-store credit cards and finance-company credit).
- Try not to add new credit.
Consumer Reports also has a great report on Myths & Hidden Truths About Car Insurance Savings. The following are some of their myths:
- Your premium is based on your risk.
- You can save a lot by bundling car and home insurance.
- You’ll get a nice discount if you buy anti-theft equipment.
- You get a loyalty discount for staying with the same company a long time.
Basically, they found that very little savings are involved in the last 3 myths.
Well, all of this information got me thinking. How about you? Pursuant to Colorado law, you are required to have car insurance, but it never hurts to be skeptical and try to get the best price for you.
If you enjoyed this blog, you may be interested in the following blogs:
- Car Insurance: How Much Do You Need?
- How your Insurance Company can get in Trouble: the Bad Faith Insurance Claim
- Do You Know What Your Auto Insurance Policy Really Covers?